RV Parks: A Hidden Gem in Real
RV Parks: A Hidden Gem in Real Estate
For every real estate investor, keeping up with the recent housing market trends is the key to success. Not to mention, real estate investing is an extremely dynamic art that is constantly subjected to new opportunities and trends.
If you’re looking to make a lucrative investment, then investing in mobile homes real estate and RV parks is a perfect option. As a part of the hottest real estate trends in the US, RV parks have become a center of attraction for many investors in the industry.
You would be wondering why people in the U.S. prefer to live in temporary homes. The only reason behind this is ‘affordability.’
Since mobile homes cost only a fraction of the price than permanent residential properties, many potential tenants looking for a residential property find mobile homes the best place to live in. Of course, it’s a better option than paying high rent for a residential property.
Due to this reason, a large proportion of tenants are drawn to mobile homes that cost $1000 or less in monthly rent. Now you would be thinking of investing in RV parks, so let’s consider the benefits it will provide you in the long run.
1. Cash Flow
Usually, RV parks have some of the highest capitalization rates that make 7-10% of the national average when compared to other asset classes. Since RV parks offer low-cost housing, they require low maintenance costs as well. For this reason, RV parks are highly likely to generate good ROI in terms of capitalization rate and cash on cash returns. Furthermore, having RV parks will allow you to earn passive income.
2. Tax Benefits
Besides significant cash flow, RV parks offer amazing tax benefits as well. This is because mobile home parks traditionally benefit from increasing depreciation rates in comparison to other asset classes.
However, it’s important to mention here that RV parks can be depreciated on a 15-year schedule; it is because most RV parks derive their value from land improvements. These improvements usually include park design, utility infrastructure, and well maintained roads.
3. Recession Resilience
Unlike other types of real estate properties, RV parks can acts as a hedge against inflation and are well insulated from economic downturns. RV parks offer low-cost rents, due to which the demand for these properties grows in hard economic times.
Besides, RV parks offer an excellent opportunity for first-time home buyers to afford a house at a much lower cost. Moreover, these properties benefit from a process that reflects the Trickle Down Theory.
Put simply, in tough economic times, people are more likely to downgrade their houses. For this reason, RV parks create a better solution for people looking for affordable housing.
Since consumers today are in constant search for affordable housing, RV parks have gained significant popularity in the US over the past decade. Considering that, it’s reasonable to say that investing in RV parks can be a perfect way to generate impressive ROI this year!
However, it’s always better to work with a professional; so, make sure to hire a real estate broker to help you find the best RV park.